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					        1. NATURE OF INSURNACE &
        Insurance is defined as a co -operative device to spread the
loss caused by a particular risk over a number of persons who are
exposed to it and who agree to ensure themselves against that risk.
Risk is uncertainty of a financial loss. It should not be confused
with the chance of loss, which is the probable number of losses out
of confused with peril, which is defined as the cause of loss or
with hazard, which is a condition, may increase the chance of loss.

        Every risk involves the loss of one or other kind.          The
function of insurance is to spread the loss over a large number of
persons who are agreed to co -operate each other at the time of
loss.   The risk cannot be over rated but loss occurring due to a
certain risk can be distributed amongst the agreed persons. They
are agreed to share the loss because the chance of loss is there.

        Everybody’s greatest asset during his/her working years is
his/her ability to earn an income.    It is important to adequately
safeguard this asset to ensure his/her cash flow will continue in the
event of an unexpected disaster.     His/her insurance policies will
help to protect him/her (if any) against any unforeseen odds.

There are two kinds of insurance available viz. Life Insurance and
General Insurance.

                                                         Prepared by N.D. Jadav   1
                        Life Insurance
    Provides for dependents in case of death.
    Replaces earning power, if disabled.
    Protects his/her ability to meet accumulation / education /
     marriage goals.

                       General Insurance
    Addresses health care concerns.
    Provides for auto, home and personal liability protection.
    Provides for potential long -term care costs.
    Plans for business continuation.

The general definitions are given by the social scientists & they
consider insurance as a device to protection a gainst risks, or a
provision against inevitable contingencies or a co -operative device
of spreading risks. Some of such definitions are given below:
    In the words of John Magee, “Insurance is a plan by which
     large number of people associate themselves & tr ansfer to
     the shoulder of all, risks that attach to individuals.”
    In the words of Sir William Bevridges, “The collective
     bearing of risks is insurance.”
    In the words of Boone & Kurtz, “Insurance is a substitution
     for a small known loss (the insurance premi um) for a large
     unknown loss, which may or may not occur.”
                                                         Prepared by N.D. Jadav   2
    In the words of Thomas, “Insurance is a provision, which a
     prudent man makes against for the loss or inevitable
     contingencies, loss or misfortune.”
    In the words of Allen Z. Mayerson, “Insurance is a device
     for the transfer to an insurer of certain risks of economic
     loss that would otherwise come by the insured.”
    In the words of Ghosh & Agarwal, “Insurance is a co-
     operative form of distributing a certain risk over a group of
     persons who are exposed t o it.”

These are based on economic or business oriented since it is a
device   providing   financial   compensation    against   risk      or
    In the words of D. S. Harsell, “Insurance may be defined as
     a social device providing financia l compensation for the
     effects of misfortune, the payments being made from the
     accumulated contribution of all parties participating in the
    In the words of Robert I. Mehr & Emerson Cammark,
     “Insurance is purchased to offset the risk resulting from
     hazards, which exposes a person to loss.”
    In the words of Riegel & Miller, “Insurance is a social
     device whereby the uncertain risks of individuals may be
     combined in a group & thus made more certain small
     periodic contributions, by the individuals provid ing a fund,
     out of which, those who suffer losses may be reimbursed.”

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Insurance follows important characteristics.

Sharing of Risks
Insurance is a co-operative device to share the burden of risk,
which may fall on happening of some unforeseen events, such as
the death of head of the family, or on happening of marine perils
or loss of by fire.

Co-operative Device
Insurance is a co-operative form of distributing a certain risk over
a group of persons who are exposed to it (Ghosh & Agarwal). A
large number of persons share the losses arising from a particular

Evaluation of Risk
For the purpose of ascertaining the insurance premium, the volume
of risk is evaluated, which forms the basis of insurance contract.

Payment of happening of specified event
On happening of specified event, the insurance company is bound
to make payment to the insured. Happening of the specified event
is certain in life insurance, but in the case of fire, marine or
accidental insurance, it is not necessary. In such cases, the insurer
is not liable for payment of indemnity.

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Amount of payment
The amount of payment in indemnity insurance depends on the
nature of losses occurred, subject to a maximum of the sum
insured. In life insurance, how ever, a fixed amount is paid on the
happening of some uncertain event or on the maturity of the

Large number of insured persons
The success of insurance business depends on the large number of
persons insured against similar risk. This will enabl e the insurer
to spread the losses of risk among large number of persons, thus
keeping the premium rate at the minimum.

Insurance is not a gambling
Insurance is not a gambling. Gambling is illegal, which gives gain
to one party & loss to the other. Insu rance is a valid contract to
indemnity against losses.   Moreover, insurable interest is present
in insurance contracts & it has the element of investment also.

Insurance is not charity
Charity pays without consideration but in the case of insurance,
premium is paid by the insured to the insurer in consideration of
future payment.

Protection against risks
Insurance provides protection against risks involved in life,
materials & property. It is a device to avoid or reduce risks.

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Spreading of risk
Insurance is a plan, which spread the risks & losses of few people
among a large number of people. John Magee writes, “Insurance
is a plan by which large number of people associates themselves &
transfer to the shoulders of all, risks attached to individuals.”

Transfer of risk
Insurance is a plan in which the insured transfers his risk on the
insurer.   This may be the reason that Mayerson observes, that
insurance is a device to transfer some economic losses to the
insurer, and otherwise such losses would have bee n borne by the
insured themselves.

Ascertaining of losses
By taking a life insurance policy, one can ascertain his future
losses in terms of money.        This is done by the insurer to
determining the rate of premium, which is calculated on the basis
of maximum risks.

A contract
Insurance is a legal contract between the insurer & insured under
which the insurer promises to compensate the insured financially
within the scope of insurance policy, & the insured promises to
pay a fixed rate of premium to the insur er.

Based upon certain principle
Insurance is a contract based upon certain fundamental principles
of insurance, which includes utmost good faith, insurable interest,

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contribution, indemnity, causa proxima, subrogation, etc., which
are the basis for succe ssful operation of insurance plan.

Utmost Good Faith
Insurance is a contract based on good faith between the parties.
Therefore, both the parties are bound to disclose the important
facts affecting to the contract before each other.       Utmost good
faith is one of the important principles of insurance.

To conclude, insurance is a device for the transfer of risks from
the insured to the insurers, who agree to it for a consideration
(known as premium), & promises that the specified extent of loss
suffered by the insured shall be compensated. It is a legal contract
of a technical nature.

To conclude, insurance is a device for the transfer of risks from
the insured to the insurers, who agree to it for a consideration
(known as premium), & promises that the spe cified extent of loss
suffered by the insured shall be compensated. It is a legal contract
of a technical nature.

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          3. INTRODUCTION OF
     In order to go through the journey of LIC – Path of private
sector insurance companies to nationalize company to again private
sector insurance companies is given as below:

                Private Life Insurance Companies


              Privatization of Life Insurance Sector

                          Life Insurance concept was accepted
    1870 –
                              with almost 250 Private Life
                                  Insurance Companies
                             Merging of almost 250 Private
                          Sector Life Insurance Companies in
                                    one nationalized
                          Life Insurance Corporation of India
                           Proposal to privatize life insurance
                           Registration process was notified
                                 Application was filed
    October                    1 s t license was issued with
     2000                           introduction of IRDA
                            During the month of January, 11
     2002                 Life and Non-Life Private Insurance
                                      license were issued
                                                       Prepared by N.D. Jadav   8
In order to elaborate the above path lets go through the history of
Life Insurance Sector.

On 3 r d December 1670, seven earnest men of Bombay with just
seven rupees for initial expenses gave shape to a plan of offering
insurance to the public without the risk of ruin and the Bomba y
Mutual Life Insurance Society came into e xistence.

Right up to the end of the 19 t h century, foreign insurance
companies had an upper hand in the matter of insurance business
and they enjoyed mere monopoly and the partiality were observed
in the form that Indian lives were insured with 10% extra premium
as a common practice, at that time Lala Harikishan Lal from
Lahore was called “The Napoleon of Indian Finance” as he was
then called to launch the Bharat Insurance Company at Lahore
(1896) in Punjab.

Prior to 1912, India had no legislation for reg ulating insurance.
The Life Insurance Companies Act 1912 and the Provident Fund
Act 1912 were passed.

The Insurance Act 1938 was the first comprehensive legislation
governing not only life but also non -life branches of insurance to
provide strict state control over insurance business.

But after the introduction of Insurance Act 1938, the demand for
nationalization of Life Insurance Industry was raised, there were
so many reasons in order to nationalize the insurance sector.
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They are:
     Policyholders will be provided cent percent security.
     Expenses will be reduced due to Absence of duplication,
      wasteful competition
     Better service due to absence of profit motive.
     The funds will be available for nation building activities.
     Insurance is servicing sector and s o that it should be in the
      hands of government only.

Above are few but strong reasons, which have contributed towards
nationalization of insurance sector, and then after in the year 1956,
all insurance companies were merged in to one and Life Insurance
Corporation of India came into existence.

Till the year 1999, LIC of India was the only insurance sector in
economic market with ever-increasing growth rate and market
share with the capacity to earn high rate of profit and thus
profitability. In spite of all these merits of LIC, the overall status
of insurance sector was not so satisfactory.

            Business figure before the introduction of IRDA

             Population                            1.00   Billion
       Insurable Population                        0.36   Billion
     No. Of insured individuals                    0.08   Billion
        Potential uninsured                        0.28   Billion
      New Business premium                         0.66 Billion

                                                           Prepared by N.D. Jadav 10
Above stated figures clearly shows that from 1 Billion population
of India, almost 0.28 Billion population was uninsured. Again the
existing government unit did not properly meet the emer ging
segments like retirement, disability.    Moreover, the government
wanted 25% p.a. growth rate in new business premium from
insurance sector. All these factors combine forced the government
to take the decision about the privatization of insurance secto r.

In order to increase the business activities, the introduction of
IRDA was made by Government.               Thus, IRDA (Insurance
Regulatory and Development Authority) witnessed the existence
power to co-ordinate regular and control the insurance business.

                Private Insurers in Indian Insurance Market
 Registration          Date of            Name of the Company
     No.             Registration
     101              23.10.2000           HDFC Standard Life
     104              15.11.2000           Max New York Life
     105              24.11.2000          ICICI Prudential Life
     107              10.01.2001        Om Kotak Mahindra Life
     109              31.01.2001         Birla Sun Life Insurance
     110              12.02.2001        TATA AIG Life Insurance
     111              30.03.2001            SBI Life Insurance

                                                          Prepared by N.D. Jadav 11
         AT A GLANCE


On January 19, 1956 the President of the Indian Union issued an
ordinance, providing for the taking over, in public interest, of the
management of life insurance pending nationalization of such
business, & the then Finance Minister explained the objectives of
nationalization of life insurance business.

In June 1956, the parliament passed a bill for nationalization of
life insurance business in India and for setting up a corporation as
the sole agency for carrying on this business in India.            The
corporation, set up under this Act, is known as “Life Insurance
Corporation of India”, which started functioning on September 1,

For the purpose of servicing of policies issued before September 1,
1956, some integrated head offices & integrated branch office
units were created.    These offices have nothing to do with the
policies issued by the corporation.     Corporation also took over
foreign life business of the Indian insurers.

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Objectives of LIC

    Maximize     mobilization   of   people’s   savings   by making
     insurance – linked savings adequately attractive.          Conduct
     business with utmost economy & with the full realization
     that the moneys belong to the policyholders.
    To publicize & extent the insurance business specifically in
     rural & remote areas.
    To provide suitable financial security at reasonable cost.
    To make the investments mo re dynamic by popularizing the
     savings plans attached with insurance.
    To invest the insurance fund keeping with maximum benefit
     & interest of insured’s.
    To run the insurance business at minimum administrative
    To function as trusts of the insured’s.
    To fulfill the needs of the society in a changing social and
     economic environment.
    To    make   the   employees     collectively    responsible      for
     providing efficient services to the insured’s.
    To develop work satisfaction among agents & employees.


     HDFC Standard Life Insurance Co. Ltd. is a joint venture
between HDFC, India’s largest housing finance institution and
Standard Life Assurance Company, Europe’s largest mutual life
company.      HDFC manages Rs. 21,450 Crores in assets and
Standard Life manages over US $100 billion in assets.          Both the

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promoters are well known for their ethical dealings, their financial
strength and their commitment to be a long -term player in the life
insurance industry.


     Max New York Life Insurance Company is a joint venture
between New York Life International Inc. and Max India Limited.
New York Life, a Fortune 100 Company, is one of the world’s
experts in life insurance with over 156 years of experience in the
business and over US$ 165 billion (Rs. 775,000 Crores) in assets
under management.         Max India Limited is a multi -business
corporate, focused on the knowledge, people, and service -oriented
business of life insurance, healthcare and information technology.


     ICICI Prudential Life Insurance Company is a joint venture
between   ICICI   Bank,    a   premier   financial   powerhouse     and
Prudential plc, a leading international financial services group
headquartered in the United Kingdom. ICICI P rudential was
amongst the first private sector insurance companies to begin
operations in December 2000 after receiving approval from
Insurance Regulatory Development Authority (IRDA).

                                                         Prepared by N.D. Jadav 14

     Om Kotak Mahindra Life Insurance, a company under Kotak
Mahindra Group is a 74:26 life insurance joint venture between
Kotak Mahindra Finance Limited with Old Mutual, U.K.

The philosophy of Om Kotak Mahindra is helping their customers
take financial decisions at every stage in life.   Their aim is to
consistently offer a wide range of innovative life insurance
products, to help their customers remain financially independent,
which is why they believe that freedom to take life on "Jeene Ki

The alliance of Om Kotak Mahindra with Old M utual has given it
unmatched expertise in life insurance area.    With 156 years of
experience in life insurance business, Old Mutual is today an
International Financial Service Group based in London.           Old
Mutual is listed on London Stock Exchange and also o n South
African, Namibian, Malawi and Zimbabwe Stock Exchange.


It is a joint venture of Aditya Birla Group and Sun Life Financial
Services with the objective that Insurance is not about something
going wrong. It's often ab out things going right. One of the
wonders of human nature is that we never believe anything can
actually go wrong. Surely, life has its share of ifs. At Birla Sun
                                                      Prepared by N.D. Jadav 15
Life however, we believe it has its equally pleasant share of buts
as well. We at Birla Sun Life stand committed to helping you
realize those happy moments, which make a life. Be it living the
same lifestyle in your post retirement days or providing a secure
future for your loved ones, in case something happens to you.


     Tata AIG is a joint venture that is backed by the Tata Group
– India’s most respected industrial conglomerate, with revenues of
more than US $8.4 billion, and American International Group, Inc.
(AIG) – the leading US-based international insurance an d financial
services organization, with a presence in over 130 countries and
jurisdictions throughout the world.   Tata AIG offers a gamut of
innovative products in the Life Insurance sector.


     SBI Life Insurance Company Ltd. is a joint venture between
State Bank of India and Cardiff of France. SBI is the largest bank
in India and Cardiff is a leading insurance company in France
operating in 29 countries. Cardiff is a wholly owned subsidiary of
BNP Paribas, the largest European Bank.

                                                       Prepared by N.D. Jadav 16
5. Share of Private Insurance Players

        As per the figure available with IRDA reports for the period ended in
 August 2005, the 13 private players have grabbed nearly 26% market share
 from LIC in terms of premium underwritten as against 17.70% in August
 2004” The list of insurer with premium underwritten, investment and their
 market share have been presented in table.
        Table shows that the life insurance market has collected Rs. 16,604cr as
 a fresh premium. It grew about 2.8 times bigger than he 3 players put together
 in terms of premium collection. It is still growing at the rate 26% per annum. It
 is relevant to that the market share by them. Out of 13 pvt. Players, ICICI
 prudential has leading pvt. Player in the Life insurance, invested rs. 625 cr
 which is the highest investments among the private players and captured first
 position with 7.11% of the market share. Secondly, Max New York life has
 invested Rs. 305 cr and had failed to capture the second position in terms of
 market share and was satisfied with only 1.32% Followed by HDFC standard
 Life had invested Rs. 255 cr and 2.96% of the market share was captured and
 stood third position    interims of investments and capturing market share.
 Allianz Bajaj has invested Rs. 250 cr and stands fourth in terms of investment
 but captured second position with 6.12% of the market share. This indicates
 that there is no relation between investment and acquiring market share and
 mere capital is not alone playing any significant role in terms of capturing
 market share. There may be some other variables like: (a) innovative schemes,
 (b) brand loyalty, (c) professional outlook, (d) transference in their
 transactions, etc. It can be noticed that the capital is not playing any attaching,
 kindly significant role in terms of premium collection and capturing market

                                                                     Prepared by N.D. Jadav 17
 share. It seems to be Bajaj Allianz would occupy the first position in near
 future in terms of market share as well as annual growth rate.

        Chart 1 shows that. Among private players, the ICICI prudential has
 captured the 28% of the market share up to December 2005, followed by
 Allianz Bajaj with 23% and HDFC Standard Life with 11% TATA Aig life and
 Birla Sunlife with 7% each and remaining other players have captured less than
 5% of market share.

                 2%2%                                       LIC
   2%                                                       ICICI Pru. Life
 4%                                          28%            New York MaxLife
3%                                                          HDFC Standard Life
                                                            Alliance Bajaj
7%                                                          TATA AIG
                                                            OM Kotak Mahindra
                                                            AVIVA Life
7%                                               5%         ING Vysya
                                                            SBI Life Insu.

                                           11%              AMP Sanmar

                                                                  Prepared by N.D. Jadav 18
                  Chart 2 shows that the annual growth rate of the private life insurance
        players from November 2004-05. it is interesting to note that Allianz Bajaj has
        achived 264.09% annual growth rate in terms of premium collection and the
        fastest growing insurance players, followed by HDFC Standard with 143.1%
        and Metlife with 136.45%, and remaining other players have doubled their
        premium in a span of one year, whereas Birla Sunlife and SBI life have failed
        to collect the premium consistently and registered negative growth rates 7.93%
        and 2.48% respectively. Surprisingly, ICICI Prudential Co. has not been
        retrained in their leading position in 2005.
                  The market share of the LIC has been declining since 2000, after
        opening up of the sector to private companies, LIC’s higher market share in the
        number of policies sold compared with premium income, so it is to be inferred
        that the private players are cornering a larger share of high premium policies.
        Further all policymakers are expected that, insurance business will take wings
        under bancassurance but despite the belief SBI Life was registered negative
        2.48% annual growth rate in corresponding period. It is need to be viewed
        serious by the RBI and IRDA authorities.

                   Annual Growth rate of Private Insu.
                      Players from Nove. 2004-05
Annual growth


                 100          73.02 0.41
                                  9                     93.9100.43 98.69
                                               66.23 8.24                  78.06
                   0                                            -2.48       -7.93
                       ICICI Pru.


                                                                    SBI Life







                                                                               Prepared by N.D. Jadav 19
     6. Introduction of ICICI Group

       ICICI Bank is India’s second-largest bank with total assets of about
Rs.112.024 crore and a network of about 450 branches and offices and about
1750 ATMs. ICICI Bank offers a wide range of banking products and financial
services to corporate and retail customer through a variety of delivery channels
and through its specialized subsidiaries and affiliates in the areas of investment
banking, life and non-life insurance, venture capital, asset management and
information technology. ICICI Bank’s equity shares are listed in India on stock
exchanges at
       Chennai. Delhi, Kolkata and Vadodara, the Stock Exchange, Mumbai
and the National Stock Exchange of India Limited and its American Depositary
Receipts (ADRs) are listed on the New York Stock Exchange (NYSE).

       ICICI Bank was originally promoted in 1994 by ICICI Limited, an
Indian financial institution, and was its wholly owned subsidiary. ICICI’s
shareholding in ICICI Bank was reduced to 46% through a public offering of
shares in India in fiscal 1998, an equity offering in the form of ADRs listed on
the NYSE in fiscal 2000, ICICI Bank’s acquisition of Bank of Mathura Limited
in an all-stock amalgamation in fiscal 2001, and secondary market sales by
ICICI to institutional investors in fiscal 2001 and fiscal 2002. ICICI was formed
in 1955 at the initiative of the World Bank, the Government of India and
                                                                   Prepared by N.D. Jadav 20
representatives of Indian industry. The principal objective was to create a
development financial institution for providing medium term and long term
project financing to Indian businesses. In the 1990s, ICICI transformed its
business from a development financial institution offering only project finance
to a diversified financial services group offering a wide variety of products and
services, both directly and through a number of subsidiaries and affiliates like
ICICI Bank, In 1999, ICICI become the first Indian company and the first bank
or financial institution from non-Japan Asia to be listed on the NYSE.

       After consideration of various corporate structuring alternatives in the
context of the emerging competitive scenario in the Indian banking industry,
and the move towards universal banking, the management of ICICI and ICICI
Bank formed the view that the merger of ICICI with ICICI Bank would be the
optimal strategic alternative for both entities, and would create the optimal legal
structure for the ICICI group’s universal banking strategy. The merger would
enhance value for ICICI shareholders through the merged entity’s access to
low-cost deposits, greater opportunities for earning fee-based income and the
ability to participate in the payment system and provide transaction-banking
services. The merger would enhance value for ICICI Bank shareholders through
a large capital base and scale of operations, seamless access to ICICI’s strong
corporate relationships built up over five decades, entry into new business
segments, higher market share in various business segments, Particularly fee-
based services, and access to the vast talent pool of ICICI Bank approved the
merger of ICICI and two of its wholly-owned retail finance subsidiaries, ICICI
Personal Financial Services Limited and ICICI Capital Services Limited, With
       Shareholders of ICICI and ICICI BANK approved the merger in January
2002, by the High Court of Gujarat at Ahmedabad in March 2002, and by the
High Court of
       Judicature at Mumbai and the Reserve Bank of India in April 2002.
Consequent to the merger, the ICICI group’s financing and banking operations,
both wholesale and retail, have been integrated in a single entity. ICICI Bank is
the only Indian company to be rated above the country rating by the
international rating agency moody “s and the only Indian company to be
awarded an investment grade international credit rating. The Bank enjoys the
highest AAA (or equivalent) rating from all Leading Indian rating agencies.

                                                                    Prepared by N.D. Jadav 21
      Prudential P.L.C.
       Established in 1848, today prudential plc is a leading international
financial services company with some 16 million customers, policyholders and
unit holders and some 20,000 employees worldwide. In the UK Prudential is a
leading life and pensions provider with around seven million customers. M&G
was acquired by Prudential in 1999 and is the Group’s UK and European fund
manager, responsible for managing over of 111 billion of funds (as at
December 2003). Launched by Prudential in 1998, Egg is an innovative
financial services company, with over three million customers, with nearly six
per cent of UK credit card balances. In Asia, Prudential is the leading European
life insurer with 23 life and fund management operations in 12 countries
serving some five million customers. In the US, Prudential owns Jackson
National Life, a leading life insurance company, and has more than 1.5 millions
policies and contracts in force.

       Prudential has brought to market an integrated range of financial services
products that now includes life assurance, pensions, mutual funds, banking,
investment management and general insurance. In Asia, Prudential is UK”s
       Largest life insurance company with a vast network of 22 life and mutual
fund operations in twelve countries – China, Hong Kong, India, Indonesia,
Japan, Korea, Malaysia, the Philippines, Singapore, Taiwan, Thailand and
Vietnam. Since 1923, Prudential has championed customer-centric products and
services, supported by over 60,000 staff and agents across the region.

       Prudential plc’s strong mix of business around the world positions us
well to benefit form the growth in customer demand for asset accumulation and
income in retirement. Our international reach and diversity of earnings by
geographic region and product will continue to give us significant advantage.

        Our commitment to the shareholders who own Prudential is to maximize
the value over time of their investment. We do this by investing for the long
term to develop and bring out the best in our people and our businesses to
produce superior products and services, our international peer group in terms of
total shareholder returns.

       At Prudential our aim is lasting relationships with our customers and
policyholders, through products and services that offer value for money and
security. We also seek to enhance our Company’s reputation, built over 150
years, for integrity and for acting responsibly within society.
                                                                  Prepared by N.D. Jadav 22
      ICICI Prudential Life Insurance:
       ICICI Prudential Life Insurance Company is a joint venture between
ICICI Bank, a premier financial powerhouse and Prudential Plc, a leading
international financial services group headquartered in the United Kingdom.
ICICI Prudential was amongst the first private sector insurance companies to
begin operations in December 2000 after receiving approval from insurance
Regulatory Development Authority (IRDA).

       ICICI Prudential’ s equity base stands at Rs.6.75 billion with ICICI Bank
and Prudential plc holding 74% and 26% stake respectively. In the year ended
March 31,2004 the company had issued over 430,000 policies, for a total sum
assured of over Rs 8,000 crore and premium income in excess of Rs.980 crore.
The company has a network of about 30,000 advisors; as well as 12 banc
assurance tie-ups. Today the company is the number one private life insurer in
the country.

                                                                 Prepared by N.D. Jadav 23

                            K. V. Kamath
              Managing Director and Chief Executive Officer

                  Lalita Gupte                Kalpana Morparia
            Joint Managing Director         Joint Managing Director

              Chanda Kochhar                    Nachiket Mor
           Deputy Managing Director        Deputy Managing Director

Board Committees

                                      Board Governance &
  Audit Committee
                                      Remuneration Committee

  Mr. Sridar Iyengar                  Mr. N. Vaghul
  Mr. Narendra                        Mr. Anupam Puri
  Murkumbi                            Mr. M. K. Sharma
  Mr. M. K. Sharma                    Mr. P. M. Sinha
                                      Prof. Marti G.

  Customer Service
                                      Credit Committee

                                                                      Prepared by N.D. Jadav 24
N. Vaghul             Mr. N. Vaghul
Narendra Murkumbi     Mr. Narendra Murkumbi
M.K. Sharma           Mr. M .K. Sharma
P.M. Sinha            Mr. P. M. Sinha
K. V. Kamath          Mr. K. V. Kamath

Fraud Monitoring
                      Risk Committee

Mr. M. K. Sharma      Mr. N. Vaghul
Mr. Narendra          Mr. Sridar Iyengar
Murkumbi              Prof. Marti G.
Mr. K. V. Kamath      Subrahmanyam
Ms. Kalpana           Mr. V. Prem Watsa
Morparia              Mr. K. V. Kamath
Ms. Chanda D.
Share Transfer &
                      Management Committee
Mr. M. K. Sharma      Ms. Lalita D. Gupte
Mr. Narendra          Ms. Kalpana Morparia
Murkumbi              Ms. Chanda D. Kochhar
Ms. Kalpana           Dr. Nachiket Mor
Ms. Chanda D.

Committee of

Mr. K. V. Kamath
Ms. Lalita D. Gupte
Ms. Kalpana
Ms. Chanda D.
Dr. Nachiket Mor

                                           Prepared by N.D. Jadav 25
         7. ICICI Pru. ‘S Products

Insurance solution for individuals…..

       ICICI Prudential Life Insurance offers a range of innovative, customer-
centric products that meet the needs of customers at every life stage. Its 17
products cab is enhanced with up to 6 riders, to create a customized solution for
each policyholder.

                           Savings Solutions…..

        Secure Plus is a transparent and feature-packed savings plan that offers 3
levels of protection. Cash Plus is a transparent, feature-packed savings plan that
offers 3 levels of protection as well as liquidity options. Save n Protect is a
traditional endowment savings plan that offers life protection along with
adequate returns. Cash Back is an anticipated endowment policy ideal for
meeting milestone expenses like a child’s marriage, expenses for a child’s
higher education or purchase of an asset.

Protection Solutions…….

       LifeGuard is a protection plan, which offers life cover at very low cost. It
is available in 3 coupons – level term assurance, level term assurance with
return or premium and single premium.
                                                                    Prepared by N.D. Jadav 26
Child Solutions…….
       Smart kid child plans provide guaranteed educational benefits to a child
along with life insurance cover for the parent who purchases the policy. The
policy is designed to provide money at important milestones in the child’s life.
SmartKid child planed are also available with in unit-linked form – both single
premium and regular premium.

Market-linked Solutions

       LifeLink is a single premium Market Linked Insurance Plan, which
combines life insurance cover with the opportunity to stay, invested in the stock
market. Life Time offers customers the flexibility and control to customize the
policy to meet the changing needs at different life stages. It offers 3 investment
options –Growth Plan, Income plan and Balance plan.

                               Retirement Solutions……

        Forever Life is a retirement products targeted at individual in there
thirties. Secure Plus Pension is a flexible pension plan that allows one to select
between 3 levels of cover.

Market-linked retirement products

        Life Time Pension is a regular premium market-linked pension plan. Life
Link Pension is a single premium market linked pension plan. ICICI Prudential
also launched “Salaam Zindagi”, a social sector group insurance policy targeted
at the economically underprivileged sections of the society.

Group Insurance Solutions……

                                                                   Prepared by N.D. Jadav 27
      ICICI Prudential also offers Group Insurance Solutions for companies
seeking to enhance benefits to their employees.

                                  Group Gratuity Plan……

       ICICI Pru”s group gratuity plan helps employers fund their statutory
gratuity obligation in a scientific manner. The plan can also customize to
structure schemes that can provide benefits beyond the statutory obligations.

Group Superannuation Plan

       ICICI Bank offers flexible defined contribution superannuation scheme
to provide a retirement kitty for each member of the group. Employees have the
option of choosing from various annuity options or opting for partial
commutation of the annuity at the time of retirement.
Group Term Plan

Group Term Plan……

      ICICI Pru”s flexible group term solution helps provides affordable cover
to members of group. The cover could be uniform or based on designation/rank
or a multiple of salary. The benefit under the policy is paid to the beneficiary
nominated by the member on his/her death.

Flexible Rider Options

       ICICI Pru Life offers flexible riders, which can be added to the basic
policy at marginal cost, depending on the specific of the customer.

Accident & disability benefit: If death occurs as the result of an accident
during the term of the policy, the beneficiary receives an additional amount
                                                                 Prepared by N.D. Jadav 28
equal to the sum assured under the policy. If the death occurs while traveling in
an authorized mass transport vehicle, the beneficiary will be entitled to twice
the sum assured as additional benefit.

Accident benefit: This rider option pays the sum assured the rider on death due
to accidents.

Critical Illness Benefit: protects the insured against financial loss in the event
of 9 specified critical illnesses. Benefits are payable to the insured for medical
prior to death.

Major Surgical Assistance Benefits: provides financial support in the event of
medical emergencies, ensuring that benefits are payable to the life assured for
medical expenses Incurred for surgical procedures. Cove is offered against 43
different surgical procedures.

Income Benefit: This rider pays the 10% of the sum assured to the nominee
every year, till maturity, in the event of the death of the life assured. It is
available on SmartKid, SecurePlus and Cashplus.

Waiver of Premium: In Case of total and permanent due to an accident, the
premiums are waived till maturity. This rider is available with SecurePlus and

                                                                   Prepared by N.D. Jadav 29
                  8. Finance Department

       Financial management, as an academic discipline, has undergone
fundamental changes in its scope and coverage.        In the early years of its
evolution it was treated synonymously with the raising of funds. In the current
literature pertaining to financial

       Management, a broader scope so as to include, in addition to
procurement of funds, efficient use of resources is universally recognized.
Similarly, the academic thinking as regards the objective of financial
management is also characterized by a change over the years.

       Financial management, as an integral part of overall management, is not
a totally independent area. It draws heavily on related disciplines and fields of
study, such as economics, accounting, marketing, production and quantitative
methods. Although these disciplines are interrelated, there are key differences
among them. The relationship between finance and accounting, conceptually
speaking, has two dimensions:

(1)    They are closely related to the extent that accounting is an important
       input in financial decision-making and
(2)    There are key differences in viewpoints between them.
The viewpoint of accounting relating to the funds of the firm is different from
that of finance. The measurement of funds (income and expenses) in accounting
is based on the accrual principle/system.

                                                                  Prepared by N.D. Jadav 30
Capitalization and Capital Structure:

       Capital structure can affect the value of a company by affecting either its
expected earnings or the cost of capital, or both. While it is true that financing-
mix cannot affect the total operating earnings of a firm, as they are determined
by the investment decisions, it can affect the share of earnings belonging to the
ordinary shareholders. The capital structure decision can influence the value of
the firm through the earnings available to the shareholders. But the leverage
can largely influence the value of the firm through the cost of capital. In
exploring the relationship between leverage and value of a firm the relationship
between leverage and cost of capital from the standpoint of valuation.

       The importance of an appropriate capital structure is, thus, obvious.
There is a viewpoint that strongly supports the close relationship between
leverage and value of a firm. There is an equally strong body of opinion, which
believes that financing-mix or the combination of debt and equity has no impact
on the shareholders’ wealth and the decision on financial structure is irrelevant.
In other words, there is nothing such as optimum capital structure.

       Capital structure theories are based on certain assumptions, they are:
[1]    There are only two sources of funds used by a firm: perpetual risk less
       debt and ordinary shares.
[2]    There are no corporate taxes. This assumption is removed later.
[3]    The dividend-payout ratio is 100. That is, the total earnings are paid out
       as dividend to the shareholders and there are no retained earnings.
[4]    The total assets are given and do not change. The investment decisions
       are, in other words, assumed to be constant.

                                                                    Prepared by N.D. Jadav 31
[5]    The total financing remains constant. The firm can change its degree of
       leverage (capital structure) either by selling shares and use the proceeds
       to retire debentures or by raising more debt and reduce the equity capital.
[6]    The operating profits (EBIT) are not expected to grow.
[7]    All investors are assumed to have the same subjective probability
       distribution of the future expected EBIT for a given firm.
[8]    Business risk is constant over time and is assumed to be independent of
       its capital structure and financial risk.
[9]    Perpetual life of the firm.

Leverage Analysis:

A firm can make use of different sources of financing whose costs are different.
These sources may be, for purposes of exposition, classified into those that
carry a fixed rate of return and those on which the returns vary. The fixed
returns on some sources of finance have implications for those who are entitled
to a variable return. Thus, since debt involves the payment of a stated rte of
interest, the return to the ordinary shareholders is affected by the magnitude of
debt in the capital structure of a firm.

The employment of an asset or source of funds for which the firm has to pay a
fixed cost or fixed return may be termed as leverage. Consequently, the
earnings available to the shareholders as also the risk are affected. If earnings
les the variable costs exceed the fixed cost, or earnings before interest and taxes
exceed the fixed return requirement, the leverage is called favorable. When they
do not, the result is unfavorable leverage.

There are 2 types of leverage- ‘operating’ and ‘financial’. The leverage
associated with investment (asset acquisition) activities is referred to as
                                                                    Prepared by N.D. Jadav 32
operating leverage, while leverage associated with financing activities is called
financial leverage. While we are basically concerned with financial leverage for
purposes of the financing decision of a firm, the discussion of operating
leverage is to serve as a background to the understanding of financial leverage
because the two types of leverage are closely related. Operating leverage is
determined by the relationship between the firm’s sales revenues and its
earnings before interest and taxes (EBIT). The earnings before interest and
taxes are also generally called as operating profits. Financial leverage
represents the relationship between the firm’s earnings before interest and taxes
(operating profits) and the earnings available for ordinary shareholders. The
operating profits (EBIT) are thus, used as the pivotal point in defining operating
and financial leverage. In a way, operating and financial leverage represent two
stages in the stages in the process of determining the earnings available to the
equity shareholders and, hence, their discussion in this chapter. Apart from the
elaboration of the return-risk implications, their combined effect has also been
      Operating leverage results from the existence of fixed operating expenses
in the firm’s income stream. The operating leverage may be defined as the
firm’s ability to use fixed operating costs to magnify the effects of changes in
sales on its earnings before interest and taxes. Operating leverage occurs any
time a firm has fixed costs that must be met regardless of volume. We employ
assets with fixed cost in the hope that volume will produce revenues more than
sufficient to cover all fixed and variable costs. In other words, with fixed costs,
the percentage change in profits accompanying a change in volume is greater
than the percentage change in volume. This occurrence is known as operating

      Financial leverage relates to the financing activities of a firm. The
sources from which funds can be raised by a firm, from the point of view of the

                                                                    Prepared by N.D. Jadav 33
cost/charges, can be categorized into [1] those which carry a fixed financial
charge, and [2] those which do not involve any fixed charge. The sources of
funds in the first category consist of various types of long-term debt, including
bonds, debentures, and preference shares. Long-term debts carry a fixed rate of
interest which is a contractual obligation for the firm. Although the dividend on
preference shares is not a contractual obligation, it is fixed charge and must be
paid before anything is paid to the ordinary shareholders.           The equity
shareholders are entitled to the remainder of the operating profits of the firm
after all the prior obligations are met. Financial leverage results from the
presence of fixed financial charges in the firm’s income stream. These fixed
charges do not vary with the earnings before interest and taxes (EBIT) or
operating profits.

Capital Budgeting:

       Capital budgeting decision pertains to fixed/long-term assets which by
definition refer to assets which are in operation, and yield a return, over a
period of time, usually, exceeding one year. They therefore, involve a current
outlay or series of outlays of cash resources in return for an anticipated flow of
future benefits. In other words, the system of capital budgeting is employed to
evaluate expenditure decisions which involve current outlays but are likely to
produce benefits over a period of time longer than one year. These benefits may
be either in the form of increased revenues or reduced costs. Capital
expenditure management, therefore, includes addition, disposition, modification
and replacement of fixed assets.
      Capital budgeting decisions are of paramount importance in financial
decision-making. In the first place, such decisions affect the profitability of a
firm. They also have a bearing on the competitive position of the enterprise
mainly because of the fact that they relate to fixed assets. The fixed assets
                                                                   Prepared by N.D. Jadav 34
represent, in a sense, the true earning assets of the firm. They enable the firm to
generate finished goods that can ultimately be sold for profit. The current assets
are not generally earning assets. Rather, they provide a buffer that allows the
firms to make sales and extend credit. True, current assets are important to
operations, but without fixed assets to generate finished products that can be
converted into current assets, the firm would not be able to operate. Further,
they are ‘strategic’ investment decisions as against ‘tactical’- which involve a
relatively small amount of funds. Therefore, such capital investment decisions
may result in a major departure from what the company has been doing in the
past. Acceptance of a strategic investment will involve a significant change in
the company’s expected profits and in the risks to which these profits will be

Working Capital Management:

       Working capital management is concerned with the problems that

arise in attempting to manage the current assets, the current liabilities

and the interrelationship that exists between them. The term current

assets refer to those assets which in the ordinary course of business

can be, or will be, converted into cash within one year without

undergoing a diminution in value and without disrupting the operations

of the firm. The major current assets are cash, marketable securities,

accounts receivable and inventory.

                                                                    Prepared by N.D. Jadav 35
      Current liabilities are those liabilities which are intended, at their

inception, to be paid in the ordinary course of business, within a year,

out of the current assets or earnings of the concern. The basic current

liabilities are accounts payable, bills payable, bank overdraft, and

outstanding expenses. The goal of working capital management is to

manage the firm’s current assets and liabilities in such a way that a

satisfactory level of working capital, it is likely to become insolvent and

may even be forced into bankruptcy. The current assets should be large

enough to cover its current liabilities in order to ensure a reasonable

margin of safety. Each of the current assets must be managed efficiently

in order to maintain the liquidity of the firm while not keeping too high a

level of any one of them. Each of the short-term sources of financing

must be continuously managed to ensure that they are obtained ad used

in the best possible way. The interaction between current assets and

current liabilities is, therefore, the main theme of the working capital


Receivables Management:

      The receivables represent an important component of the current

assets of a firm. The receivables are defined as ‘debt owned to the firm
                                                              Prepared by N.D. Jadav 36
by customers arising from sale of goods or services and in the ordinary

course of businesses. When a firm makes an ordinary sale of goods or

services and does not receive payment, the firm grants trade credit and

creates accounts receivable, which could be collected in the future.

Receivables management is also called trade credit management. Thus,

accounts receivables represent an extension of credit to customers,

allowing them a reasonable period of time in which to pay for the goods


      The sale of goods on credit is an essential part of the modern

competitive economic systems. In fact, credit sales and, therefore,

receivables are treated as a marketing tool to aid the sale of goods. The

credit sales are generally made on open account in the sense that there

are no formal acknowledgements of debt obligations through a financial

instrument. As a marketing tool, they are intended to promote sales and

thereby profits. However, extension of credit involves risk and cost.

Management should weigh the benefits as well as cost to determine the

goal of receivables management. The objective of receivables

management is ‘to promote sales and profits until point is reached

where the return on investment in further funding receivables is less
                                                           Prepared by N.D. Jadav 37
than the cost of funds raised to finance that additional credit (i.e. cost of

capital)’. The specific costs and benefits, which are relevant to the

determination of the objectives of receivables management, are:

o     Cost

o     Collection cost

o     Capital cost

o     Delinquency cost

o     Default cost

Dividend policy:

      Dividend refers to that portion of a firm’s net earnings which are

paid out to the shareholders. Since dividends are distributed out of

profits, the alternative to the payment of dividends is the retention of

earnings/profits. The retained earnings constitute an easily accessible

important source of financing the investment requirements of firms.

There is, thus, a type of inverse relationship between retained earnings

and cash dividends. Larger the retention, lesser dividends; and smaller

retentions, larger dividends. Thus, the alternative uses of the net

                                                               Prepared by N.D. Jadav 38
earnings-dividends    and   retained   earnings-are   competitive     and


       A major decision of financial management is the dividend decision

in the sense that the firm has to choose between distributing the profits

to the shareholders and plugging them back into the business. The

choice would obviously hinge on the effect of the decision on the

maximizing present values; the firm should be guided by the

consideration as to which alternative use is consistent with the goal of

wealth maximization. That is, the firm would be well advised to use the

net profits for paying dividends to the shareholders if the payment will

lead to the maximization of wealth of the owners. If not, the firm should

rather retain them to finance investment programes. The relationship

between dividends and value of the firm should, therefore, be the

decision criterion.

       There are however, conflicting opinions regarding the impact of

dividends on the valuation of a firm. According to one school of thought,

dividends are irrelevant so that the amount of dividends paid has no

effect on the valuation of a firm. On the other hand certain theories

                                                           Prepared by N.D. Jadav 39
consider the dividend decision as relevant to the value of the value of

the firm measured in terms of the market price of the shares. The crux of

the argument supporting the irrelevance of dividends to valuation is that

the dividend policy of a firm is a part of its financing decision.

        As a part of the financing decision, the dividend policy of the firm

is a residual decision and dividends are a passive residual. If the

dividend policy is strictly a financing decision, whether dividends are

paid out of profits, or earnings are retained, will depend upon the

available investment opportunities. It implies that when a firm has

sufficient investment opportunities, it will retain the earnings to finance

them.     Conversely,    if   acceptable   investment     opportunities     are

inadequate, the implication is that the earnings would be distributed to

the shareholders.

        The test of adequate acceptable investment opportunities is the

relationship between the return on investments and the cost of capital.

As long as investments exceed cost of capital, a firm has acceptable

investment opportunities. In other words, ifs firm can earn a return

higher tan its cost of capital; it will retain the earnings to finance

                                                                Prepared by N.D. Jadav 40
investment projects. If the retained earnings fall short of the total funds

required, it will raise external funds-both equity and debt-to make up the


                9. Marketing Department

Marketing Yesterday and Today

Today the definition of marketing has been changed. The marketing activity of an
organization before the product is produced and continues even after the product is
sold. In the buyer market of recent times the sharpest weapon that a company can
develop is globalize marketing place in the value creation and delivery. The proud and
demanding customer of today brings before corporate a critical fact, when the
customer is jury. It is the value generation for the customer that will separate the victor
from vanquished. The value of customer service cascades all over the company. The
aim of customer focus is not just satisfaction but delight satisfaction.

Till the year 1999 the life insurance business was exclusively conducted by the Life
Insurance Corporation (LIC) while the general insurance business in India, was
exclusive by General Insurance Corporation and its four subsidiaries. The insurance
sector is opened for private participation since November, 2000.

Before 1999 there was no marketing done by LIC due to its monopoly but now after 5
years the picture has changed. Now there are private players in market. With the
effective marketing techniques the private players has changed the whole scenario of

                                                                           Prepared by N.D. Jadav 41
the insurance sector. They are slowly and gradually driving the business out of the
hands of the LIC. Before 1999 customer had no option other then LIC, but now they
have got many options.

This is the significant change in insurance industry. Now the customer is back in the
center state. All the companies are trying to please the customer with the innovative
schemes and better service.

                 Relationship Marketing in Insurance


It is five times more expensive to acquire a new customer than to retain an old one.

Relationship marketing is the practice of building long term satisfying relationship
with key parties customers and suppliers. They accomplish this by promoting and
delivering high quality, goods, services, and fair prices to other parties overview.
Relationship marketing results in strong economic, technical and social ties among the

Definition of Relation Marketing:

Relationship marketing can be defined as the “process to identify, establish, maintain
and other stakeholders at a profit so that the objective of all parties involved are net
and this is done by mutual exchange and fulfillment of promises.

The important objectives of relationship marketing to acquire new customers maintain
and enhance relationship with existing customers, re-activities of ex-customers and
handling of customer terminations. The key objective of relationship marketing is to
                                                                        Prepared by N.D. Jadav 42
establish one to one relationship with all the customers. This may have sound like a
day dream few dream few years ago but thanks to the technological breakthrough and
technological solution providers, it is very much of a reality.

How to add value through relationship Marketing

Identify loyal customers

Recognize their special needs

               Provide special reward for loyalty

                       Establish continuing relationship

                                Ensure increase in customer value

Relationship marketing is one of the hottest tread in the present marketing scenario.

Satisfied customers not only stay with a company but they are also walking talking
advertisement for the company’s product.

                                                                        Prepared by N.D. Jadav 43
             10. Operation Department
      The Operation department oils the work processes between the customer
and company to ensure consistent and quality service to the customer. To
streamline the operations, the operations department interfaces between the
clients and the agents, the branches and the under writers, and manages work

The vision at customer service

      Is to deliver “World Class Service” at every opportunity. Units such as
the 9 to 9 contact centre, out bound call centre, customer care. And query
reduction unit are all committed across the country. ICICI Prudential has one
of the largest distribution networks amongst private life insurers in India,
having commenced operations in 58 cities and towns in India.

      These are….. Agra, Ahmedabad, Ajmer, Amritsar, Aurangabad,
Bangalore, Bhopal, Calicat, Chandigrah, Chennai, Coimbatur,       Dehradun,
Gurgaon, Hyderabad, Hubli, Indore, Jaipur, Jalandhar, Jamnagar, Kanpur,
karnal, Kochi, Kolkatta, Kota, Kolhapur, Kottayan, Lucknow, Ludhiana,
Madurai, Mangalore, Meerut, Mumbai, Nagpur, Nashik, Noida, New Delhi,

                                                               Prepared by N.D. Jadav 44
Patiala, Pune, Raipur, Rajkot, Ranchi, Surat, Thane, Thrissur, Trichy,
Trivendrum, Udaipur, Vadodara, Vashi, Vijayawada and Vizag.

       The Company has twelve banc assurance tie-ups having agreements
with ICICI Bank, Federal Bank, South Indian Bank, Bank of India, Lord
Krishna Bank, Punjab and maharastra Co-Operative Bank, Goa State Co-
operative Bank, Indoor Paraspar Sahakari Bank, Manipal State Co-Operative
and Jalgaon People’s Co-Operative Bank, as well as some corporate agents. It
has tie-up with organizations like Dhan for Distribution of Salaam Zindgi, a
Policy for the socially and economically underprivileged sections of society.

ICICI Prudential has recruited and trained over 32000 insurance advisors to
interface with and advice customers. Further, it leverages is State-of the art IT
infrastructure to provide superior quality of service to customer.

The Operation Department of ICICI Prudential delivers the following services
to the customers such as:
 Out Bound Call Centre
 Customer Care
 Query Resolution Unit
 Policy Login Process
 9 to 9 Contact Centre

Role of Information Technology in Operation Department:

       The Information Technology function at ICICI Prudential is committed
to enables business through the use of technology. It is segmented into 4
groups to enable highest levels of delivery to the customers: Life Asia
Solutions Group that provides flexibility in designing better product offering to

                                                                     Prepared by N.D. Jadav 45
end-users, the Solutions Group- Web that provides real-time information to
customers and is responsible for customer relationship management, IT
Architecture and Corporate Solutions Group is in charge of developing and
maintaining a blueprint for the IT Architecture for the enterprise as a whole.
This team works as an in house R & D Solution Group, exploring new
technological initiatives and also caters to information needs of corporate
functions in the organizations. IT Infrastructure group is responsible for
providing hardware, software, network services to the whole organization. This
group runs the “Digital Nervous System” of the Enterprise at the highest levels
of efficiency and provide robust, scalable and highly available platform for
development of business application.

      With the help of Information Technology, an advisor and managers can
login the policy fro any of the offices of ICICI Prudential Ltd. And also with
the help of IT any employee or management can know any information, any
thing about the policy, advisor’s record, any branch’s sales, any new schemes,
any manager’s record, and other thins at any time any place.

                                                                 Prepared by N.D. Jadav 46
       11. Human Resource Department
Introduction to HRM:-

       Human resource management is a management function that helps
managers’ recruit, select, train and develops members for an organization.
HRM is concerned with the people’s dimension in organization. ‘Manpower’ or
‘human resource’ may be thought of as ‘the total knowledge, shills, creative
abilities, talents and aptitudes of an organization’s work force, as well as the
values, attitudes and benefits of an individual involved. It is the sum total of
inherent abilities, acquired knowledge and shills represented by the talents and
aptitudes of the employed persons.

       Of all the ‘Ms’ in management (i.e. the management of materials,
machines, methods, money, motive power), the most important ‘m’ for men or
human resources. It is the most valuable asset of an organization, and not the
money or physical equipment. It is in fact an important economic resource,
covering all human resources- organized or unorganized, employed or capable
of employment, working at all levels- supervisors, executives, government
employees, ‘blue’ and ‘white' collar workers, managerial, scientific,
engineering, technical, skilled or unskilled persons, who are employed in
creating, designing, developing, managing and operating productive and service
enterprises, and other economic activities.

Human resources are utilized to the maximum possible extent in order to
achieve individual and organizational goals. And organization’s performance
and resulting productivity are directly proportional to the quantity of its human

                                                                  Prepared by N.D. Jadav 47
   Organization Structure:-

          ‘Organization’ is a group of people working together cooperatively
   under ‘authority’ toward achieving goals and objectives that mutually benefit
   the participants and the organization. A well-known author of HRM Allen says
   “the process of identifying and grouping the work to be performed, defining
   and delegating responsibility and authority, and establishing relationships for
   the purpose of enabling people to work most effectively together in establishing
   of objectives”

          The essence of this definition is that people who work together require a
   defined system or structure through which they relate to each other and through
   which their efforts can be coordinated. Every organization has goals or
   objectives for its existence. In the case of Personnel Management, it is to
   optimize “the effectiveness of human resources”. These goals can be achieved
   more suitably if the behavior of the workers and the composition of the
   organization can be predicted and integrated cooperatively. The formal
   organization structure attempts to give order and unity to the actions and efforts
   of those who work together.

          An organization tries to establish an effective behavioral relationship
   among selected employees and in selected work places in order that a group
   may work together effectively. There are three kinds of work which must be
   performed whenever an organization comes into being:
o Division of labor
o Combination of labour and
o Coordination

                                                                      Prepared by N.D. Jadav 48
The organization structure at ICICI web trade is somewhat like this:

                        C.E.O. Mr. K.V. Kamath

                          Board of Directors

                  National Head (at Mumbai-branch)

                      Unit manger/ In charge of
                    Gujarat region (at Ahmedabad)

                      Assistant unit manager
               (Mr. Hardik Sir: at Ahmedabad branch)

    Sales               Sales                     Sales                Sales
  Executive          Executive                  Executive         Executive

       In any organization there is what is termed a ‘hierarchy’, refers to
various levels of authority in an organization, ranging from the Board of
Directors at the top to the sales executives at the bottom.

                                                                 Prepared by N.D. Jadav 49
Human Resource Planning:-

       Human resource planning can be explained as “the process by which a
management determines how an organization should move from its current
manpower position to its desired manpower position. Through planning, a
management strives to have the right number and right kind of people at the
right places, at the right time to do things which result in both the organization
and the individual receiving the maximum long-range benefit”.
       Coloman has defined human resource or manpower planning as “the
process of determining manpower requirements and the means for meeting
those requirements in order to carry out the integrated plan of the organization.”
       Stainer defines HRM as “Strategy for the acquisition, utilization,
improvement, and preservation of an enterprise’s human resources. It relates to
establishing job specifications or the quantitative requirements of jobs
determining the number of personnel required and developing sources of

       Human resources planning are a double-edged weapon. If used properly,
it leads to the maximum utilization of human resources, reduces excessive labor
turnover and high absenteeism; improves productivity and aids in achieving the
objectives of an organization. Faultily used, it leads to disruption in the flow of
work, lower production, less job satisfaction, high cost of production and
constant headaches for the management personnel. Therefore, for the success of
an enterprise, human resource planning is a very important function, which can
be neglected only at its own peril. It is as necessary as planning for production,
marketing, or own peril. It is as necessary as planning for production marketing,
or capital investment.

                                                                    Prepared by N.D. Jadav 50
Recruitment Sources:-

       Human resource planning helps to determine the number and type of
people an organization needs. Job analysis and job design specify the tasks and
duties of jobs and the qualifications expected from prospective jobholders. The
next logical step is to hire the right number of people of the right broad groups
of activities. Recruitment forms the first stage in the process which continues
with selection and ceases with the placement of the candidate. It is the next step
in the procurement function, the first being the manpower planning. Recruiting
makes it possible to acquire the number and types of people necessary to ensure
the continued operation of the organization.

       Recruiting is the discovering of potential applicants for actual or
anticipated organizational vacancies. In other words, it is ‘linking activity’
bringing together those with jobs and those seeking jobs. As Dale Yoder and
other point out: “Recruitment is a process to discover the sources of manpower
to meet the requirements of the staffing schedule and to employ effective
measures for attracting that manpower in adequate numbers to facilitate
effective selection of an efficient working force.” Accordingly, the purpose of
recruitment is to locate sources of manpower to meet job requirements and job

       Recruitment has been regarded as the most important function of
personnel administration, because unless the right types of people are hired,
even the best plans, organization charts and control systems would not do much
good. Flippo views recruitment both as ‘positive’ and ‘negative’ activity. He
says “it is a process of searching for prospective employees and stimulating and
encouraging them to apply for jobs in an organization. It is often termed
positive in that it stimulates people to apply for jobs to increase the ‘hiring

                                                                   Prepared by N.D. Jadav 51
ratio’ i.e. the number of applicants for a job. Selection, on the other hand tends
to be negative because it rejects a good member of those who apply, leaving
only the best to be hired.”

Selection Methods:
       The selection procedure is concerned with securing relevant information
about an applicant. This information is secured in a number of steps or stages.
The objective of selection process is to determine whether an applicant meets
the qualifications for a specific job and to choose the applicant who is most
likely to perform well in that job.

       The hiring procedure is not a single act but it is essentially a series of
methods or steps or stages by which additional information is secured about the
applicant. At each stage, facts may come to light which may lead to the
rejection of the applicant. A procedure may be compared to a series of
successive hurdles or barriers which an applicant must cross. These are
intended as screens, and they are designed to eliminate an unqualified applicant
at any point in the process. This technique is including all these hurdles. The
complexity of a process usually increases with the level and responsibility of
the position to be filled.

       According to Dale Yoder, “the hiring process is of one or many a ‘go,
no-go’ gauge. Candidates are screened by the application of these tools.
Qualified applicants go on to the next hurdle, while the unqualified are
eliminated.” Thus, an effective selection programme is a non-random process
because those selected have been chosen on the basis of the assumption that
they are more likely to be “better” employees than those who have been

                                                                   Prepared by N.D. Jadav 52
       The team ICICI is one of the best one in the corporate sector presently.
CEO Mr. Kamath joined ICICI in 1971. H says, “In these days ICICI did not
take part in campus placement, they contacted one of my professors, who
alerted me. I joined as a trainee. It was the first batch of MBAs that ICICI took
on.” Joint MD Lalita Gupte, who joined the same batch as KAMATH, has
similar memories. She was a topper from Mumbai’s Jamnalaa Bajaj Institute of
Management. Bang next-door was ICICI. (That was before it moved to the
Bandra-Kurla complex). “I did not think twice, though there were other offers,”
she says more than a decade later Kochhar – also a topper at Bajaj walked
across the road for an interview with Kamath and joined up. For MOR, who
matches Kochhar in vintage, it was not all that automatic. “At IIMA, ICICI was
a Day 5 company,” he remembers. “It was part of the debris that gets swept in.”
But he joined, nevertheless, because of the “impressive presentation” by ICICI
and his belief that the organization would be supportive of the social work he
was interested in.

       The other key member of Klamath’s team – Morparia – is not an MBA
but a lawyer. Her first job was with a solicitors’ firm. She decided to apply to
ICICI after reading an inspirational article in Reader’s Digest while traveling in
a BEST bus in Mumbai. Both normally take you for a ride. But in this case it
worked out to Moravia’s advantage. “I joined at a handsome salary of Rs 710 a
month,” she says.

Placement & Induction:-
       Placement at ICICI bank is done very critically. The human resources
are considered very critical and are said to be main power of the bank. The
CEO Mr. K. V. Kamath says, “Human capital is very important at ICICI.
Training is a big thing; each employee spends at least 69 hours during the year
recharging himself”. Placement is done on the qualification and merit basis.

                                                                   Prepared by N.D. Jadav 53
Generally for the retail banking and other in house jobs placement is done on
the basis of the interviews by branch and regional heads. They select only those
competent people who are ready to work round the clock and have full
dedication towards the bank.

       Induction is a technique by which a new employee is rehabilitated into
the changed surroundings and introduced to the practices, policies and purposes
of the organization. In other words, it is a welcoming process-the idea is to
welcome a new comer, make him feel at home and generate in him a feeling
that his own job, however small, is meaningful and has significance as a part of
the total organization.

       When a new comer joins an organization, he is an utter stranger to the
people, work place and work environment. He may feel insecure, shy and
nervous. The first few days may be anxious and disturbing ones for him. He
may have anxiety caused by not following the usual practices prevalent in the
organization, or the haphazard procedures, and lack of information. These may
develop discouragement, disillusionment or defensive behavior. Induction leads
to reduction of such anxieties; dispels the irrational fears present employees and
hold colleagues responsible for assisting the new comer so that he may feel
confident. ICICI says that, “newcomers are to be a part of informal
identification of talent apart, there is a formal process. It starts form induction,
where newcomers are subject to the OPQ (occupational personality
questionnaire). The tests have also been conducted right up to the general
manager and senior general manger.

                                                                     Prepared by N.D. Jadav 54
Training and Development:-
       ICICI is a kind of private sector bank where if you are confident and
competent then you can get your carrier advancement and development at a
very high speed. CEO Mr. K. V. Kamath says, “There are several young people
in our organization who are on the threshold of making it to the board”. He
himself has this habit of dropping in unannounced on people tow or three levels
below him. It helps him to keep a tab on things and also to find out who is
knocking on top management doors. His management by walking about also
takes him to the basement, to see that everything is spick and span. He does like
to get to the bottom of things.
       At ICICI executive development programme is more important. Because
they believe that if the executives are properly trained, properly motivated and
fully focused then they can guide any kind of work force. All those persons
who have authority over others and are responsible for their activities and for
the operations of an enterprise are managers. In a business organization, the co-
ordination and direction of the efforts of others is a major part of the
management job. The manager has to deal not only with the staff but also with
others outside his own group, and has decided influence on the organization.

Performance Appraisal Policy:-

       Once the employee has been selected, trained and motivated, he is then
appraised for his performance. Performance appraisal is the step where the
management finds out how effective it has been at hiring and placing
employees. If any problems are identified, steps are taken to communicate with
the employee and to remedy them. A “performance appraisal” is a process of
evaluation an employee’s performance of a job in terms of its requirements.

  12. Research Design and Methodology
                                                                  Prepared by N.D. Jadav 55

    To Study the Brand awareness of the new product i.e. Unit Linked
     Insurance Plans in Ahmedabad City.
    To know what are the priorities of people of city for making investment in
    To know what are the perception of the consumer about ICICI Prudential
     Life Insurance Co.
    To know the standing of the ICICI Prudential Life Insurance Co. in
     Ahmedabad City.

Data Source:

The data would be collected from both primary as well as secondary source.
Consumers would be asked to fill questionnaires to arrive at the information.
Various secondary sources of data as magazines, journal, Internet etc. would
also be explored.

Sampling Area:

    The sampling areas of this research are Ahmedabad.

Sampling method:
       The convenient sampling method was used for this research and the
respondents were those who have already taken life insurance policy.
                                                                Prepared by N.D. Jadav 56
Sample Size:
       The size of this research is 50 respondents.

Research Instrument:
       The research instruments, which was used, for collecting the data is

Method of contact:
       The method of contact would be personal and direct as this would help to
qualify the customer’s issues while filling up the questionnaire and also helps
them if they do not have the knowledge about any insurance plan of the

Method of making an approach for Sales:
       After analyzing the data form the questionnaires the needs of prospects
were identified and the best suitable insurance solution was suggested to them

Data Collection and Analysis

Q.1.   Do you have a Life Insurance Policy?
                                                                Prepared by N.D. Jadav 57
             Criteria                No. Of Respondents
               Yes                            50
               No                              0

As our sample is those people who have insurance so all the respondents are
falling under the “Yes” criteria.

Q.2.   Which Company’s Insurance Policies do you have?

                     Company                       No. of Respondents

         LIC                                              50
         Birla Sunlife                                     2
         SBI                                               3
         ICICI Pru. Life                                  10
         Kotak Mahindra                                    3
         Post Office                                      15
         HDFC                                              3

                                                                 Prepared by N.D. Jadav 58
                              No. of Respondents

           No. of           40
           Respondents      20



       As from the above chart it is very clear the all of the respondents have an
insurance of the LIC while some of them have an insurance of the other
companies like post Office, ICICI Prudential Life insurance Co., HDFC Co.
       The reason behind this is that the LIC competitor since more than four
decades and the Indian Govt. allowed the Introduction of private player in
Insurance in the year 2000.

Q.3    What is amount of insurance premium you pay annually?

                 Criteria                No. of Respondents
            Below Rs. 10,000                         11
             10,000 to 20,000                        18
             20,000 to 30,000                        6
             30,000 to 40,000                        5
              Above 40,000                           10

The analysis of the above available data is merely to find out the percentage of
income that one is willing to invest in insurance.

                                                                            Prepared by N.D. Jadav 59
   Q.4                   What priorities would you consider most important, while
                         purchasing a policy?

Criteria/Rank                     1             2         3       4         5          Total
Death Benefit                     29            10        6       2         3            50
 Children’s                       7             13       21       3         0            44
 Retirement                       5             5         6       20        7            43
Tax Planning                      8             18        8       8         6            48
  Financial                       2             5         3       11       25            46

                                       Priorities of Respondents
    No. of Respondents

                         60                                            Death Benefit
                         40                                            Children’s Future
                                                                       Tax Planning






   From the table and chart it can be say that most of the people rank death benefit
   first for the decision to make investment in Insurance. Their second priority is
                                                                           Prepared by N.D. Jadav 60
tax planning because the premium, which is paid by the people towards
Insurance, is deductible up to certain limit from the income and also the
maturity amount is also tax free. The third and fourth priorities are children’s
future and retirement planning.

Q.5      Do you have any knowledge of the stock market?

              Criteria              No. of Respondents
                Yes                          32
                 No                          18

Q.6      If “Yes” do you have any knowledge about unit linked insurance

              Criteria              No. of Respondents
                Yes                          25
                 No                           7

The question number 5 and 6 are designed to know the awareness of people
who have knowledge of share market or deals in shares also have the
knowledge of the new modern insurance product i.e. Unit Linked Insurance
Plan. From the available data it can be say that those who deal in shares are also
aware of the ULIP.

                                                                   Prepared by N.D. Jadav 61
Q.7   Is your current Insurance policy “Unit Linked” or “Traditional?

              Criteria            No. of Respondents
         Only Unit Linked                  0
           Only Traditional               39
                Both                      11

                 Respondents Having ULIP and
                 Traditional Insurance Products

               22%       0%
                                                  Only Unit Linked
                                                  Only Traditional

From the Q. No. 7 we can say that even though the modern products available
in the market since more than two years and which are having the more
flexibility and also giving the higher return than traditional one most of the
people do not have or may be not aware of it which shows the lack of brand
awareness and it requires an aggressive promotional efforts on the part of
There is a lot of scope available for the company to attract more customers by
giving or introducing most suitable ULIP products and at the same time increase
the customer base.

                                                                 Prepared by N.D. Jadav 62
                 Q.8         If given a choice, where would you like to invest your money?
                             (Please Rank Your Choice)

Choice/Rank                         1      2       3       4     5       6           7       8      Total
Mutual Fund                         0      1       5       1    25     12            5       1        50
       Insurance                    4     12      14       4     8       3           0       0        45
                     Gold           4      8       1       2     2       5           13     13        48
           Equities                17      3       0       5     2       6           1       0        34
  Post Office                      22     12      12       2     2       0           0       0        50
     Debenture                      0      2       4       10    1     14            2       0        33
Bank Deposit                        0      6      12       19    1       0           3       1        42
                     Other         10      5       0       2     1       0           0       2        20

                                         Investment Priorities
No. of Respondents

                      50                                                                  Mutual Fund
                      40                                                                  Insurance
                      30                                                                  Gold
                      20                                                                  Equities
                      10                                                                  Post Office

                                                                                          Bank Deposit

                 This question is mainly designed to know the investment priorities of the people
                 of Ahmedabad town. The objective behind this Q. is that after the Charotar
                 Nagrik Co-oprerative Bank and other Credit Societies, which are giving higher

                                                                                          Prepared by N.D. Jadav 63
    interest on deposits, the whole scenario of city is changed. Most of the people
    prefer to invest in post office saving schemes and where their money is safe
    even though the return is very less. So there is a great need to divert the efforts
    of the company towards the safety and security as ICICI Prulife is a private
    insurance Company.

    Q.9       According to you what are the factors that would affect you decision
              while purchasing an insurance policy?

Criteria/Rank            1         2          3           4           5             50
    Premium              12       15         15           6           2             50
      Return             21       17          8           2           2             50
      Safety             20       14         15           1           0             50
    Liquidity            1         1          9           18         21             50
      Market             1         2          0           16         21             40

                Factors Affecting the Insurance

              60                                               Criteria/Rank
   No. of

              40                                               Premium
              20                                               Return
               0                                               Safety
                     1        2   3    4      5       6        Liquidity
                                  Rank                         Market Condition

                                                                          Prepared by N.D. Jadav 64
          The question No. 9 is designed to know which the factors are affecting
the most to the prospect while making decision to invest in insurance. As far as
investment in insurance is concerned most of the people want that it should be
safe and at the same time giving the compatible returns because insurance is not
only for death benefit it is also a saving tool for future. So the mix response of
respondents is welcomed. Available data is such that there is a bit ambiguity.
But we can say that the most affecting factors to the prospect are return and
safety. As per the finance theory risk and return goes in hand in hand but as far
as insurance is concerned it is all about the compatible and safe returns over

Q. 10 Are you or ay of your family members are planning to buy an
          insurance policy in near future?

                    Criteria             No. of Respondents
                       Yes                        13
                       No                         37

This question is taken to collect the information of those respondents who are
going to plan to purchase insurance within near future that is used by the
company for making personal contact for sale.

Q. 11 Are your needs satisfied with your current investment in insurance?

                    Criteria             No. of Respondents
                       Yes                        10
                       No                         30

                                                                   Prepared by N.D. Jadav 65
Q. 11(a)       If “No”, then give reasons?

        Criteria              No. of Respondents
     High Premium                       0
      Low Return                        1
     Poor Services                      7
           Others                       2

                              No. of Respondents

                    20%      0%    10%
                                                          High Premim
                                                          Low Return
                                                          Poor Services

The question No.11 and 12 are designed to know the percentage of people who
are not satisfied with the current investment in insurance and also to know the
reasons behind it. So that the company can focus on those areas where the
competitors fail. Because now a days the competition is very stiff in the
insurance industry. All companies are trying to attract more customers by
anyhow. So it will be useful for designing the promotional schemes of the
      From the above table and chart it can be seen that the respondents who
are dissatisfied give the main reason behind it are poor services. There are many
others reasons like more time taken by the company for claim settlement, non-

                                                                   Prepared by N.D. Jadav 66
dispatchment of cheques and other important vouchers, etc. So the company can
improve upon these and increase its market share by offering quality service to
the customers.

Q. 12 Do you know anything ICICI Prudential Life Insurance?

             Criteria              No. of Respondents
                 Yes                       30
                 No                        20

Q. 13 If “Yes”, from where did you come to know about the company?

            Criteria               No. of Respondents
           Television                      4
          News Paper                       3
      Sales Representative                14
         Others source                     9

                       Toal No. of Advertisement
                  30%                                   News Paper

                             47%                        Others source

                                                                     Prepared by N.D. Jadav 67
Q. 14 What do you feel about “ICICI Prudential Life Insurance?
       (Open Ended)

       The question No.13, 14 and 15 are designed to know the company
awareness the respondents of the city and also the source of awareness. But I
felt very much difficulty while filling up these questions because most of the
people know about the company but they know it as an ICICI Bank not as a
different identity. So there is a great need to design the advertisement campaign
in such a way that it will create the different image of the company. The main
reason behind this is that the image of ICICI Bank in city is such that most of
the people ask for charges first than the service that it provides.

                                                                      Prepared by N.D. Jadav 68
Q.1.   Do you have a Life Insurance Policy?

       Yes            No     

Q.2.   Which Company’s Insurance Policies do you have?
       (Please specify the numbers)

       LIC                           SBI Life Insurance          
       HDFC Standard Life            New York MaxLife            
       Birla Sunlife                 Alliance Bajaj              
       Cholamandalam                 ICICI Pru. Life Insurance   
       TATA AIG Insurance            MetLife Insurance           
       ING Vysya                     OM Kotak Mahindra           
       AVIVA Life                    AMP Sanmar                  
Q.3    What is amount of insurance premium you pay annually?


Q.4    What priorities would you consider most important, while
       purchasing a policy? (Please Rank Your Choice)

       Death Benefit              
       Children’s Education       
       Retirements Benefit        
       Tax Planning               
       Financial Planning         
                                                             Prepared by N.D. Jadav 69
Q.5   you have any knowledge of the stock market?

      Yes         No      

Q.6   If “Yes” do you have any knowledge about unit linked insurance

      Yes         No      

Q.7   Is your current Insurance policy “Unit Linked” or “Traditional?

      Yes         No      

Q.8   If given a choice, where would you like to invest your money?
      (Please Rank Your Choice)

      Mutual Funds                   Post Office Schemes       
      Insurance Policies             Debentures                
      Gold                           Banks (FD’s etc.)         
      Equities                       If other (specify)___________

Q.9   According to you what are the factors that would affect you decision
      while purchasing an insurance policy?
      (Please Rank Your Choice)

      Premium                     
      Return                      
      Safety                      
      Liquidity                   
      Market Condition            

                                                             Prepared by N.D. Jadav 70
Q. 10 Are you or any of your family members are planning to buy an
      insurance policy in near future?

      Yes          No    

Q. 11 Are your needs satisfied with your current investment in insurance?

      Yes          No    

Q. 11 (a)     If “No”, then give reasons?

      High Premium                      Poor Services       
      Low Return                        Other Reasons__________

Q. 12 Do you know anything ICICI Prudential Life Insurance?

      Yes          No    

Q. 13 If “Yes”, from where did you come to know about the company?

      T.V.                 Newspaper           Magazine   
      Radio                Internet            Hoarding   
      Others (Please Specify)_____________________________

Q. 14 What do you feel about “ICICI Prudential Life Insurance?

                                                             Prepared by N.D. Jadav 71
                        13. Conclusion

      So according to the data available form the survey one can conclude that
even though the Unit Linked Insurance Plans are very much popular in Metro
and semi cities, the product awareness of ULIP is very low among the people of
city and at the same time there is a need to create the different image of the
company among the people by any means like advertisement, seminars or

                                                               Prepared by N.D. Jadav 72
         14. SWOT Analysis:

   Strengths
    o   Flexible Products
    o   Partners having experience in different markets of
        the world.
    o   Synergy with exiting operations
    o   Expertise in the field of insurance
    o   Professional management
    o   Good Customer service
    o   Create a brand name
   Weakness
       Low capital base
       Yet to build strong distribut ion network
       Cannot tap rural market
   Opportunities
    o   Untapped market
    o   Banks   ready   to   tie   up   for   as   a    readymade
        distribution network for a small fee.
   Threats
       Large distribution network of LIC
       Decades of experience and brand name of LIC
       5% service tax on investments.

                                                       Prepared by N.D. Jadav 73
            15. BIBLIOGRAPHY

Website address

India Today
ICFAI Journal
Outlook Express

LIC literature and brochures
ICICI Prudential literature and brochures

                                            Prepared by N.D. Jadav 74

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